The Association of British Insurers (ABI) has issued its response to an open letter sent it to its Chair from the UK’s publican and brewery sector over the industry’s response to the Covid-19 pandemic.
Earlier this month Stephen Gould Chairman of the One Voice Group write to ABI Chair John Dye to outline its concerns around the support offered by insurers to their clients in the hospitality sector.
Mr Gould said he was writing on behalf of trade associations representing 50,000 pub businesses and 2,000 brewers.
The letter stated: “We have come together in a concerted effort to mitigate the most damaging aspects of the lockdown for our businesses and have presented a unified voice to Government in calling for a comprehensive package of measures to sustain our sector, protect jobs & livelihoods and safeguard our great British pubs.
“Within this context of a national, collaborative effort across our entire supply chain there has been one notable omission – insurance companies. We had hoped insurers would work with us at this critical time. With one or two exceptions, the collective failure of insurers to step up and meet their obligations has been deeply disappointing.”
It added: “The vast majority of our pub sector businesses have taken a policy including business interruption, with a clear expectation that a material disruption to their business through events beyond their control would be covered. Industry survey data has found that only 1% of hospitality businesses, 3% of BII members, and 4% of BBPA member companies have received a positive response from their insurer. In normal circumstances this would be unacceptable, in this crisis it is frankly deplorable and threatens business survival for thousands of pub businesses.
“We are aware of legal actions pending but in advance of these cases proceeding we would urge the insurance companies’ senior executives to agree to meet with us to discuss and lead a constructive way forward at the earliest possible opportunity.”
However in response ABI Director General, Huw Evans, (pic) said the industry acknowledged the uncertainty the COVID-19 crisis has created for many businesses, particularly in the hospitality sector and outlined the industry response to COVID-19 with regard to business insurance cover:
“Businesses are typically protected against day to day risks such as damage to premises from fire or flood, motor accidents, supplier failure and employee harm,” he said. “Last year, in the UK alone, these types of everyday claims from businesses amounted to £7.8bn. Business interruption cover is typically built around something specific happening to the physical premises, not something to the whole country. “
Mr Evans added the industry expected to pay out a significant sum to businesses.
“Our latest estimate, informed by data from our members to support our response to questions from the Treasury Select Committee, is that £900m will be paid by insurers to businesses for interruption as a result of the COVID-19 crisis as part of an estimated £1.7bn insurance pay-outs in the UK from ABI members and Lloyd’s of London,” he said.